"The Global X Cybersecurity ETF ( NASDAQ:BUG) has had a rough year. For a thematic ETF built around an exploding threat, that's disappointing. But here's the thing: cybersecurity stocks aren't struggling because the thesis is wrong. They're struggling because investors now demand perfection from high-growth software companies, and even strong results aren't enough anymore. Consider Zscaler ( NASDAQ:ZS), a top-10 BUG holding. The company has faced investor scrutiny despite strong operational performance."
"Despite the stock pain, the underlying cybersecurity thesis is strengthening. AI-enabled agentic attacks, where autonomous systems identify and exploit vulnerabilities at scale, are emerging as the next frontier of cyber threats. Enterprise security spending isn't slowing down. It's accelerating. BUG holds a concentrated portfolio of cybersecurity companies. The top holdings include CrowdStrike ( NASDAQ:CRWD), Palo Alto Networks ( NASDAQ:PANW), Fortinet ( NASDAQ:FTNT), and Check Point Software ( NASDAQ:CHKP), representing both cloud-native and network security leaders."
BUG ETF experienced notable underperformance in 2025 despite a growing cybersecurity threat environment. Investors have transitioned into a 'Perfection Regime' that penalizes anything short of flawless execution from high-valuation software names. Zscaler and other top holdings faced scrutiny even with strong operational results. AI-enabled agentic attacks and other advanced threats are increasing enterprise urgency, and enterprise security spending is accelerating. BUG's concentrated, equal-weight portfolio includes cloud-native and network security leaders such as CrowdStrike, Palo Alto Networks, Fortinet, Check Point, and Zscaler. Key 2026 drivers include IT/security budget commitments announced in January–February and consistent execution on billings, guidance, and customer growth.
Read at 24/7 Wall St.
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